China sets condition for talks: U.S. must drop 'unilateral' tariffs

 China has announced it is currently evaluating U.S. proposals to initiate trade negotiations. This statement, delivered by a spokesperson from China's Ministry of Commerce, marks a subtle shift in Beijing's previously defiant tone. The announcement suggests a potential opening for dialogue, contingent upon specific conditions being met by the United States. This development comes amid a backdrop of escalating trade tensions, with both nations imposing steep tariffs on each other's goods.

The Chinese spokesperson noted that the United States has sent multiple messages to China through relevant channels, expressing a desire to commence talks. This contrasts with earlier claims by President Trump that discussions were already underway, which Beijing had firmly denied. Chinese sources, including state-affiliated social media, have suggested that the U.S. appears more eager to engage in discussions, highlighting the urgency from Washington's side.

China's key condition

Beijing has reiterated that any negotiations would require the fulfillment of certain preconditions. The primary condition is that the U.S. must demonstrate genuine sincerity, which includes being prepared to rectify its actions and cancel its unilateral tariff increases. A spokesperson from China's Ministry of Commerce previously stated, "If the United States truly wants to resolve the issue... it should cancel all unilateral measures against China." 

China maintains a consistent position: "If it's a fight, we'll take it to the end. If it's a conversation, the door is open." They emphasize that without the removal of tariffs, the U.S. does not show "sincerity at all" and risks damaging mutual trust.

Context of the Trade War

The announcement comes amid a spiraling tariff war with surprisingly high tariffs imposed by both sides. The U.S. increased tariffs on China to a staggering 145% in early May, while Beijing responded by raising tariffs on U.S. imports to 125%. Specific tariffs include a 25% levy on most auto parts and a 120% (or a fixed fee) on small packages valued at $800 or less. These tariffs are "stifling" trade between the world's two largest economies.

Economic Impact

The tariff war has exacted a "high cost" on both economies. China's export and manufacturing-dependent economy has seen order cuts and production halts. Chinese factory activity contracted in April at its fastest pace in 16 months. In the U.S., the economy contracted in the first quarter for the first time since 2022, partly due to businesses rushing to import goods before tariff hikes. U.S. business owners and analysts warn of significant economic consequences, including higher prices, product shortages, and store closures.

The Political and Negotiation ‘Game’Experts describe the situation as a "game of chicken" between Trump and Xi Jinping, where both leaders attempt to "save face" while seeking a mutually beneficial outcome: de-escalation. Neither side wants to appear as the first to yield, as doing so could be perceived as weakness and result in a loss of negotiating leverage. "Constructive ambiguity" has been used as a tactic to explore an exit, allowing whoever comes to the table first to frame it as a response. A key goal for both leaders is to "secure a win for their domestic audiences."